The Problem of Bankruptcy of Business Entities as a Consequence of the COVID-19 Pandemic

Abstract

Purpose: The purpose of the article is to perform an economic and legal analysis of the problem of insolvency (bankruptcy) of business entities in conditions of the COVID-19 pandemic. Design/Methodology/Approach: Utilizing general scientific (systemic, dialectical and sociological) and specific scientific (normative-logical, comparative-legal, technical-legal, legal statistics) methods of researching economic and legal phenomena, the authors analyzed the concept and basic prerequisites for insolvency (bankruptcy) of entrepreneurial structures, the measures for the introduction of a moratorium on the bankruptcy of business entities undertaken by the Governments of Russia and Germany are considered and evaluated. Findings: As a result of the study, the authors concluded that during a pandemic, the risk factor for bankruptcy of business entities significantly increases and it is necessary to take measures to prevent the bankruptcy of business entities. The introduction of a moratorium on the bankruptcy of economic entities served as such measures in Russia and Germany. For these purposes, an appropriate regulatory and legal framework was created, providing for a ban on the introduction of bankruptcy procedures of certain economic entities. Practical Implications: The authors proposed introducing extra measures to prevent the bankruptcy of business entities in Russia in connection with the COVID-19 pandemic. In particular, it was proposed to borrow foreign experience and introduce a moratorium on the obligation to file an application by a debtor - a business entity to declare it a bankrupt, to fix a regulatory moratorium on filing applications to the arbitration court for the recognition of business entities as bankrupt by tax authorities. Originality/Value: State policy to prevent the bankruptcy of business entities in the sectors most affected by the COVID-19 restrictions significantly affects the number of bankruptcies of business entities due to the pandemic. In this regard, measures to prevent mass bankruptcy of entrepreneurs are an important factor in maintaining the stability of the state's economy.